I have no doubt that this is merely coincidence, but it is certainly funny that at the exact same time Virgin America announced a substantial improvement in finances, JetBlue announced it’s stepping up its focus on San Francisco. Funny indeed.

Let’s start with Virgin America. The airline announced second quarter numbers, and I have to admit that I was surprised that they were as “not horrendous” as they were. Don’t get too excited – they still lost a bunch of money – but they were in the realm of normal airline losses this quarter.

Though most airlines look at year-over-year changes to judge performance, I’m not a fan of doing that in Virgin America’s case. I think comparing it to the previous quarter, especially on the cost side, is more relevant since they’ve added so many flights in the past year. They lost a little under $16 million on revenues of just shy of $136 million. Net margin was a bit worse than -11%. That crushes their previous best of -34%.

Unit revenue was up 17% from a dismal first quarter, so it’s just a hair shy of last year’s unit revenue. They’ve made the most progress on costs. Excluding fuel, unit costs were down 12% since last quarter.

Things still aren’t great. They lost $10 million in cash and now stand at $28 million. But, revenues were up 35% on a 16% increase in seat miles. That’s a big improvement. So are others scared?

I don’t know if scared is the right answer, but I wouldn’t be surprise if we saw more moves like JetBlue’s. Just to make things clear, I don’t think JetBlue had any advance knowledge of Virgin America’s second quarter numbers. But clearly they have decided that SFO is worth a second look, and it’s coming at the expense of Oakland. That certainly will impact Virgin America.

JetBlue will kill one JFK and one Washington/Dulles flight from Oakland. Those airplanes will now become a second daily flight from SFO to both JFK and Boston. JetBlue will also add two more daily flights to Long Beach from SFO and a single additional daily flight from Oakland to Long Beach. Those new Long Beach slots are coming from the three daily Long Beach – San Jose flights which are going away.

We wanted to offer Long Beach travelers service to all three Bay Area airports. While we ended up doing that, we found we weren’t doing the market justice with the schedule we were offering. Unfortunately we are constrained in Long Beach, and have no ability to add additional flights under the current slot restrictions. . . . The cancellation of our San Jose route will free up the slots necessary to add more San Francisco and Oakland flights and give those markets the frequencies to make them even more competitive.

Sebastian also mentioned that if they could use their Embraer 190s in the Long Beach commuter slots, it might be a different story. But we’ve discussed that here before.

The most interesting piece was his take on the Bay Area’s changes in the last few years, especially the shifting demographics at Oakland (OAK).

We’ve noticed a change in travel patterns since we launched service to SFO two years ago. When we first launched service at OAK, San Francisco residents were more willing to travel across the Bay to catch flights there. In fact, it used to be the case that 35% of OAK Customers actually lived closer to SFO than OAK. Since our arrival at SFO, and Southwest’s and Virgin America’s, there has been no shortage of low-fare, long-haul flights there. People now are less likely to travel to OAK for the type of flight that they can just as easily get at SFO. Now only about 15% of our Customers in OAK are coming from areas closer to SFO.

Well that does make sense. So were these aimed at Virgin America? I wouldn’t really think so, but I’m sure the unwillingness of people to go out of Oakland is directly related to the entrance of Virgin America and Southwest. That’s kept fares way down at SFO. If JetBlue can put pressure on Virgin America, that’s an added bonus for them. We know Alaska is aiming for Virgin America, and others may start to take notice now that their results have gone from absolutely horrendous to within the realm of other airline losses.

Funny how when I read the JetBlue announcement last week about their added service out of SFO and Oak (to LGB) they never mentioned SJC/OAK loosing service. Come on guys be honest with your service announcements in a metro area, it’s not like we won’t know what you are doing. The media, family, and friends we all have around the bay area keep each other informed. I can hop on the freeway and go a few minutes up to OAK, down the same freeway to SJC, or cross the bridge in my town to hit the 101 and up to SFO. So tell the whole service story in a metro area and not look like you are hiding something. Oh, I guess you were.

When you think about it, why would JetBlue really care about Virgin America. Shouldn’t JetBlue be spending it’s time and money to fight Delta in the NY area now that DL is going to grow at LGA?

Rather interesting that JetBlue is also stepping onto United’s turf, since that SFO is a major hub for UA (esp for it’s trans-pacific flights), also LH is now looking to codeshare with JetBlue (see story in the Financial Times), so is LH looking to diversify and get away from UA?

When you think about it, why would JetBlue really care about Virgin America. Shouldn’t JetBlue be spending it’s time and money to fight Delta in the NY area now that DL is going to grow at LGA?

Well, I think DL’s expansion at LGA is likely to be to small cities where JetBlue isn’t really looking to compete. I don’t think JetBlue is doing this to attack Virgin America. I think it’s simply a recognition that Oakland just doesn’t cut it anymore now that there are a ton of low fares at SFO.

Rather interesting that JetBlue is also stepping onto United’s turf, since that SFO is a major hub for UA (esp for it’s trans-pacific flights), also LH is now looking to codeshare with JetBlue (see story in the Financial Times), so is LH looking to diversify and get away from UA?

I think they are looking to diversify, but I don’t think they’re looking to get away from United . . . yet.

I think LH along with UA & AC were the founding members of star. If thats right, then LH defecting to B6 could be dammaging unless CO fills the void via IAH & EWR. LH serves 16 US cities I think plus Toronto including all of UA’s hubs.

Not ok at all! Oakland really needs those flights! We used to have so many, but now you have to go all the way to SFO, get stuck in traffic, wait in their monstrous security lines and have to get there an hour and a half early, and bear fog delays just to get a simple day flight to DC!